State legislatures placed a significant focus on cannabis this term, passing four major bills that will change the landscape of the industry in Colorado. The new laws range from minor stylistic changes to the Colorado Marijuana Code and legal adjustments to allow growers more flexibility, to large-scale changes in how concentrates are regulated.
In mid-November, Colorado’s Marijuana Enforcement Division (MED) released its Final Adopted Rules to implement the bills. After months of efforts to draft regulations that have included significant public input from stakeholders across the industry, these adopted regulations are scheduled to go into effect on January 1, 2022.
The key changes in each bill are discussed below:
HB21-1178 – Correction of Errors in Colorado Marijuana Code:
This bill corrects citations in the Marijuana Code and updates grammar, wording, and terminology throughout. Specifically, the bill replaces citations in the Colorado Marijuana Code from general federal statutes to more specific US code citations; updates the terminology used to describe various marijuana products, industry players and processes; and updates contact information for subpoena requests, government appeal decisions, and other law enforcement functions. It came into effect on May 10, 2021.
HB21-1216 – Ability for Marijuana Licensees to Change Designation:
This bill allows medical marijuana to be rebranded as recreational marijuana and vice versa. It was signed by Governor Polis on June 23, 2021. This law is intended to give breeders and producers more flexibility and allows for the renaming of cannabis flower and concentrates where the sending and receiving entities have at least one identical controlling beneficial owner. Rebranded cannabis products must also pass all required tests.
Historically, regulated cannabis products were labeled as either medicinal or recreational under Colorado’s strict seed-to-sale tracking system, and the products maintained these designations throughout their lifecycle. This bill aims to improve MED’s ability to enforce regulations, as companies are subject to different requirements depending on what type of cannabis label they typically produce.
Under this law, once a cannabis product has been moved to another facility and rebranded as either medicinal or recreational, it cannot be returned to its original facility. Renamed products may not be renamed back to their original classification. In addition, renamings must be updated in the medical marijuana or recreational marijuana facility’s tracking system to ensure proper records are maintained regarding the product renaming.
Finally, the bill states that transfers and designation changes due to the reclassification will not qualify for a marijuana excise tax refund.
HB21-1301 – Measures for growing cannabis outdoors:
HB21-1301 is another new law aimed at providing more flexibility and protection for the state’s growing cannabis industry. It was signed on the same day as the Rededication Act.
With climate change and the increasing frequency of unpredictable weather events, this law provides a framework for cannabis growers to establish contingency plans to combat the effects of adverse weather events. The bill defines adverse weather events broadly as adverse weather involving drought, frost, hail, excessive humidity, wind or other adverse natural events such as wildfires, floods or earthquakes. Beginning January 1, 2022, licensees of outdoor grow facilities can begin submitting these contingency plans to the state permitting agency for approval. Contingency plans must specify the type of adverse weather event to which the plan applies. Once approved, farmers can use the submitted contingency plan in the event of such an adverse weather event.
The bill also authorizes MED to study methods to reduce cross-pollination of outdoor marijuana plants and to participate in establishing regulations on procedures for implementing emergency plans and issuing conditional employee license badges, which are subject to background checks and initial investigations.
Another important feature of this bill is the wording directing the formation of a working group to examine existing tax laws and rules applicable to the state’s wholesale cannabis cultivation market. The purpose of this provision is to understand the state’s market and to position existing businesses to the maximum extent possible to compete in the event cannabis is legalized at the federal level, which would almost certainly result in additional taxes on cannabis.
Finally, the bill provides funds from the Industrial Hemp Registration Program Cash Fund and the Marijuana Cash Fund for various departments to enforce and purchase legal services.
HB21-1317 – Regulation of Marijuana Concentrates:
Perhaps the biggest and most controversial bill of the last legislative session, HB21-1317 was signed into law by Governor Polis on June 24, 2021, and includes a number of significant changes to how marijuana concentrates are regulated. This bill, widely viewed as a legislative compromise given the pressure to introduce potency limits for cannabis, directs the Colorado School of Public Health (“CSPH”) to conduct a systematic review of potential health effects of high-potency THC cannabis and concentrates and creations implement a variety of new rules related to advertising, sales and daily restrictions on medical and retail sales.
There are a number of provisions specifically related to the controversial physical and mental health effects of high-potency THC cannabis products: The bill establishes a Scientific Review Board tasked with reviewing the recommendations of the CSPH, and instructs the CSPH to create a program to educate the general public about the effects of cannabis focuses on the developing brain. Also, with regard to education, the bill requires that medical and recreational cannabis retail stores provide customers with such sales with a specific educational resource on concentrates prepared by the state licensing board. The educational resource includes health claims and suggestions for consuming concentrates (including a recommended serving size). Applicable law requires that a doctor conduct a full medical evaluation of a patient before recommending medical marijuana; The bill now requires the patient’s mental health and mental health history to be assessed before making such recommendations. The bill introduces a number of restrictions on prescribing medical marijuana to people between the ages of 18 and 20 who have what the bill calls a debilitating or disabling disease.
There are also some notable changes related to cannabis advertising, inventory tracking, and quantity restrictions. The bill requires all facilities to record each sale immediately in the seed-to-sale inventory tracking system as they complete patient sales. This provision is intended to allow facilities to identify deviations from daily tonnage and THC concentration approvals. The law also caps the amount of both medical and retail marijuana concentrate at 8 grams, unless certain exemptions apply only to medical marijuana patients. Finally, the bill will ban cannabis advertising specifically targeting those between the ages of 18 and 20 and require all concentrate advertisements to include a warning about potential risks of overuse.
As in any highly regulated industry, the advice of an attorney is key to ensuring compliance. The information contained herein is for educational purposes only. If you have questions about the cannabis industry, please contact the authors listed below.